The Senate Committee on Banking, Housing, and Urban Affairs convened a full‑committee hearing on market structure for digital assets where senators and witnesses debated how to classify tokens and which federal agencies should oversee them.

Committee chairman Richard Scott opened by celebrating the recently passed, bipartisan Genius Act for payment stablecoins and said it is “the first step towards revolutionizing the financial system and updating our payment systems.” Ranking Member Senator Elizabeth Warren urged stronger investor protections and raised conflict‑of‑interest concerns tied to senior public officials’ crypto holdings.

Why it matters: Committee members said a durable federal framework could determine whether the United States leads global digital‑asset markets or cedes that role to other jurisdictions. Proponents argued legal clarity will let innovators build in the U.S.; critics warned that some proposals could undercut long‑standing securities laws and create regulatory arbitrage.

Industry witnesses pressed competing technical and policy prescriptions. Summer Mersinger, CEO of the Blockchain Association, told the committee: “The United States urgently needs clear, comprehensive, and carefully designed rules for digital assets.” Mersinger recommended tailored rules that account for software developers, validators and other nontraditional participants and urged a clear pathway for platforms to register and operate.

Dan Robinson, general partner at Paradigm, argued for a classification approach that treats many crypto assets as commodities and for protections for developers. “Crypto assets should be commodities,” Robinson said, adding that a token classification rubric such as the Lummis‑Gillibrand ancillary‑assets approach would reflect on‑chain uses.

Former CFTC chairman Timothy Massad warned against codifying a broad statutory redefinition of securities. Massad recommended a process in which the SEC and CFTC work together to fill regulatory gaps and cautioned that legislation that rewrites securities law risks unintended consequences: legislation “must do no harm to that regulatory framework,” he said.

Senator Warren repeatedly emphasized investor protection and singled out provisions she said could create loopholes. She warned that some proposals would allow companies to “tokenize their assets in order to evade SEC regulations” and urged prohibitions on public officials issuing, sponsoring or profiting from crypto tokens as part of any sweeping regime.

The panel also flagged developer liability and DeFi. Robinson and other witnesses urged liability protections so software engineers are not punished for third‑party uses of open‑source code. Testimony included proposals for principles‑based regulation to allow rules to adapt as technology evolves.

The committee did not vote on legislation at the hearing. Members from both parties said they expect further drafting and one‑on‑one negotiations before markup.

Less critical details: Witnesses described parallel work on stablecoins (the Genius Act) and asked the committee to coordinate any market‑structure bill with existing and forthcoming stablecoin rules.

The committee left the hearing with agreement that clarity is needed but with sharp disagreement about whether Congress should set technical definitions in statute or require agencies to develop rules under a congressional mandate.